The desperation economy

The sharing economy is more of a desperation economy, argues New York magazine.

Someone was ranting to me about this last month, blaming the president. The problem is, this problem’s roots have existed since the 1970s, if not the 1960s, which means nobody’s solved it. Two presidents from two different political parties applied quick fixes that worked for a while–I’m thinking of Reagan and Clinton–but nobody has ever successfully addressed the root cause of the income gap. While top earners–the 90th percentile and higher–generally do better year over year, as you move lower on the earnings scale, you see people doing well to hold steady. At the bottom of the scale, you see people earning less and less year over year.

I think the problem is with society. And one thing I learned almost minoring in history in college–I was one class short of a minor–is that when society looks to a leader to solve problems a leader can’t solve, history suggests you run a great danger of it leading to dictatorship.

I think the underlying and overlying problem is materialism–we want too much and aren’t willing to wait long enough to be able to afford it. We’ve spent my lifetime figuring out how to make things cheaper, but then society just tells us we need more things. When I was growing up in the 1980s, two televisions in a home was fairly normal, and one of them was probably a 13-inch model. A 13-inch TV cost $200, so three TVs was extravagance. When I was growing up, I lived across the street from a millionaire who had three TVs. He owned half the town, and literally owned the whole side of the street he lived on, and at one point he had four cars, but he had three TVs.

We figured out how to make TVs a lot cheaper, so now some middle-class people have them in every room. Elvis had a room with eight TVs in it for watching football, and somehow we’ve gotten it in our heads that someone who makes $40,000 a year needs a room with eight TVs too.

In the process of fixing up an old house, I found some old light switches with the price tags still on them: $2.19. Today light switches cost 70 cents. The old switches were made close to here. Now they’re made overseas. The people who used to make things like light switches compete for a smaller number of jobs of that type. There aren’t a lot of those, so some of those people get by doing whatever they can. It helps overseas economies get on their feet and that will be great in the long term, but what do we do about the short term here?

Probably we’ll do what we always do–we’ll put the other political party in power and tell them to solve it. They’ll try a quick fix. As long as the quick fix shows improvement in some part of the economy, they’ll keep getting another four years. If it doesn’t, the other party will get four years. Some of us will climb the ladder enough that it’s no longer a problem for us. I’m not sure what we’ll do about those who don’t.

And as long as everyone has food and entertainment, everything will be just fine for those at the top, and close enough to OK for all but the very worst off that I don’t expect we as a society will address the issue voluntarily.

The American Dream vs. the American Greed

Last week at church, our newly-installed vicar preached about greed vs. generosity, and he ripped a little on the American Dream, which he defined as each generation having better stuff and living more comfortably than their parents did.

I think he’s right, letting that consume you definitely leads to problems. But I was taught that the American Dream was more about opportunity than it was about materialism. And maybe that’s where we’ve gone wrong.

I’m probably 10 years older than the vicar is, and I attended schools that didn’t exactly value new history books. So what I was taught probably dates back two generations, not just one.

And when I was in school, for the most part they taught us that the American Dream was about opportunity, and about parents giving their kids better opportunities than they had.

Today, I hear marketers on the radio saying, "That’s the American Dream, isn’t it? Owning a home?" Or tying the American Dream to any other materialistic thing.

Note the shift. It shifted from the kids to self.

I don’t know exactly why my direct ancestor, Adam Farquhar, came to the Americas in the 1700s (perhaps 1729). Presumably it was because he couldn’t get land in Scotland. But you see the American Dream working from generation to generation. Adam’s son Benajah owned land. Benajah’s son Edward became a doctor. At least five of Edward’s sons, including my ancestor Isaac, became doctors. Isaac’s son Ralph didn’t become a doctor, but he became a successful businessman who hobnobbed with some very powerful people. Ralph Jr. revived the family tradition of being doctors, and he was wealthy enough to give my dad every opportunity in the world.

My dad never did become as wealthy or as successful as his dad was. But by Dad’s own admission, he was a slacker. It wasn’t for lack of opportunity. Look at things strictly in material terms, and Dad set the Farquhar line back a couple of generations.

But Dad gave me opportunities. Wherever we lived, he got me into a good school. When circumstances found us living in a town that didn’t have a good high school, Dad moved us out before I turned 14, so that my sister and I could go to good high schools. And Dad saw to it that we would be able to go to college.

My sons aren’t old enough to go to school yet, but they live in a good school district. And I did what I had to do in order to ensure they would have a choice between several good preschools, to get them a good foundation. I don’t know if either of them will be reading at age 3 like I was, but I’m going to make sure they have that chance.

I may have to make some personal sacrifices in order for them to have what they need. But for what Dad spent getting me a good high school education, he could have been driving Lincolns instead of those Dodge pickup trucks he drove. (And this was before pickup trucks became status symbols. Dad didn’t want his patients thinking they were paying for him to have an extravagant lifestyle.)

So I don’t have any problem brown-bagging my lunch, driving an older car, or using an older computer so my sons can go to good preschools. And given the choice between a smaller house in a great school district and a bigger house in a bad district, I’ll keep what I already have, so they can go to good schools.

What they make of it is up to them. But never let it be said that I didn’t get them the opportunity.

Self-Perpetuating Depression

My longtime friend Steve brought up a good point as we discussed our job situations. He said he read that some companies may be using the current DEPRESSION (I hate that r-word, let’s call things what they are) as an excuse to lay people off that they’ve been putting off because it would hurt morale.

The idea makes a lot of sense.I’ve been privvy, unfortunately, to management waiting for an excuse to get rid of people in the past. It’s a strategy that can backfire, but nobody likes confrontation, and waiting for an excuse is an easy way to avoid confrontation. Or to avoid having to fix problems you really don’t want to deal with.

But that creates a problem. While one business is using economic depression as an excuse to cut staff, so are lots of others. That puts more people out of work. That means they have less money, and that means they spend less.

So your neighbors’ former employees aren’t patronizing you anymore, and your revenue drops. Welcome to the vicious circle. At some point, you probably end up laying off people you really never wanted to get rid of.

It kind of sounds like a conspiracy, but really it isn’t. All it takes is a few people having that bad idea.

And there’s no real way to prevent it. Everywhere I’ve ever worked, going all the way back to high school, I’ve seen people in management positions who had no business being there. And that won’t change.

You can try to work in depression-proof industries, but is there such a thing? Everything’s connected together.

You can do what I did and minimize the way a depression can affect you. With no mortgage and no car payment, I could support my family on very little.

Of course, economists wag their fingers at people like me. Part of the problem is that people like me aren’t buying new cars because we realized there’s nothing at all wrong with the cars we have. Bad Dave.

Then again, unlike some people, after I borrowed large amounts of money, I paid it back. And part of the reason for that was because I didn’t sign on the dotted line until I did the math to figure out what life was going to be like with that mortgage payment and whether I was willing to live like that. If more people had actually paid attention to the amount of money at the end of the document–the amount that you’re going to end up paying over the course of the mortgage–and been scared, then we’d be in a lot better shape than we are now.

I do think this depression is forcing us to be a little less materialistic. And I think materialism and conspicuous consumption was what sucked us into this hole to begin with.

And in the meantime, it’s forcing some companies to look at themselves and make some hard decisions. Some aren’t surviving. Some will be missed more than others.

It’s affecting me a whole lot more now that I’m suddenly in the job pool with that other 7.2 percent. I’m sure I’ll complain a lot more. I know it’ll take a lot longer than I want for me to find employment because it already has. But I’ll be OK. I’m Scottish. I’m scrappy and tough.

And I think in the long run our country will be OK. Maybe we’ll even be better for it.

01/15/2001

Mailbag:

Misc things; The trade; Depression

Why am I still messing with 486s and low-end Pentiums? I found a reference to this on the Ars Technica message board. Let’s see. I’ve got a genuine IBM PC/AT case sitting under my futon doing nothing other than looking old. I’ve got a Media Vision Pro Audio Spectrum sound card with a SCSI port on it. I’ve got a couple of old SCSI CD-ROM drives. I’ve got an AGP video card I can put in it. I’ve got a network card I can put in it, of course. And I’ve got hard drives. Plus I’ve got systems with DIMMs in them that I put there because I’d rather put too much memory in a system than have it just sit in a drawer. So basically I can have a modern system for a song. A Backstreet Boys song.

I’ve got mail. Hopefully I’ll take care of it this evening.

The American Dream again. Friday’s R.I.P.: The American Dream got a far greater response than anything I’ve written since college other than Optimizing Windows itself, which had more than a year’s head start. I had some people write in saying I was right. Frank McPherson’s response echoed another common sentiment: the original dream may be dead, the problem is that this generation needs to find another. That’s certainly a valid point.

One letter asked if I really thought we need a depression. Now, mind you, I don’t want one, and I’m certainly not advocating sabotage of our economy. I think we’ll get our own depression anyway–the Great Depression came about because of heightened expectations that grew unrealistic. Had it not been for regulatory brakes on the system, I think we’d already have had one, because there’s a widespread Las Vegas mentality in investing these days. People aren’t content to double their money in seven years anymore. They want to do it in seven months. And while people can do that, it’s like Las Vegas: the odds are against you. So they take irresponsible risks. People who understand the math much better than I do tell me that if you save 10 percent of your income and just dump it in an index fund–a mutual fund that follows the stock market–and do that from the day of your first paycheck to the day of your last, you’ll retire a multimillionaire. No genius involved. And now that we have Roth IRAs, we can pay our taxes up front and reap the benefits tax-free.

I’m testing that theory. I forget what retirement age is supposed to be for my generation. Is it 70? Like those details matter. Come talk to me when I’m 70 and I’ll tell you how it worked out for me.

Let’s get back to that idea of finding another dream. Frank McPherson pointed to the Rev. Dr. Martin Luther King’s dream. That’s productive use of our discontent. I like that. It’s something we should be doing anyway, but often we have to have a certain degree of angst before we’ll consider doing the things we ought to do.

But will it give us fulfillment? Some. Is it better and more noble than materialism? You bet. Should we? You bet. But will it solve the problem?

No.

I’ve thought about it a lot myself. And yesterday one of the people I respect the most made an observation. God is popular. God’s making a comeback. He’s a star. There’s a wave of spirituality crashing through Hollywood and there’s even another one in Washington. The stars are finding God. Filmmakers are making movies about Him, or at least letting Him make cameos. Slimy politicians are talking about God. Heck, even some not-as-slimy politicians are. C.S. Lewis once observed that there are longings in our being that no travel, no education, no spouse can ever fulfill. He said it made sense that the existance of those longings suggests the existance of something that can and will one day fulfill them: God. So we’ve got some people turning in that direction now. This is good.

Or is it?

The God of pop culture isn’t it. The God of pop culture is God on your own terms. It’s a very American God. In America, cars from the factory aren’t good enough. We get special options. Sometimes that’s not good enough either, so we put the car in the garage and we hot-rod it. In America, we build our entertainment systems from discrete components, getting speakers tailored for our environment and other components to best take advantage of it all. Hey, even a lot of the mystique behind the computer is gone, and people are undertaking projects they never would have dreamed of. They visit hardware sites and talk in forums and stumble across sites like this one, looking for advice on the best motherboard, the best hard drive, the best video card, then they go build the computer of their dreams–or the closest thing their budget permits. In America, we get cars, entertainment, and computers–as well as other things–on our own terms.

No wonder there’s so much appeal to Universalism. Eastern religions are nice, because you can take what you like, leave what you don’t, and they aren’t exclusive. If I remember my world religions class correctly, the Buddha was a Hindu, and remained one until the day he died. And Christianity isn’t incompatible with them, at least on the surface. Self-help pioneer Jess Lair once said someone told him his book I Ain’t Much Baby, But I’m All I’ve Got had a lot of Zen Buddhism in it. Dr. Lair was a devout Catholic. How did Zen Buddhism end up in a book written by a Catholic who admitted in his own words that he never thought much about Zen Buddhism? There’s a lot of Zen Buddhism in the Bible, that’s how. Or is it there’s a lot of the Bible in Zen Buddhism?

If linguists can point world languages and say they can trace all of them back to a single language, it only makes sense that at one time there was a single world religion, from which all of them can be traced.

But I don’t subscribe to the idea of Universalism, which says all of them are correct. And even if I’m wrong, why does it matter?

After all, what do the other religions promise? They promise me that if I do certain things, if I lead my life in a certain way, I might find my way to some kind of heaven. The paths are slightly different, and the destination often is slightly different, but you can pretty much boil down the major world religions to that. What they don’t promise is assurance. There are a lot of mights in it. And none of them promise anything bad will happen to me if I don’t believe them, especially if I lead a good life anyway. I may cease to exist, just as anyone else who doesn’t quite do a good enough job would. Or maybe I won’t get reincarnated in the most desirable way. But if that happens, I get another chance.

Then there’s the great teacher Jesus–just about everyone regards Him as a great teacher–who taught something kinda sorta similar. He taught how to lead your life. But Jesus said something else. He said he was the fulfilment of Judaism, that He was the way to heaven. Period. There was no other way. Him or damnation.

I find it interesting that non-Christians regard Jesus as a great teacher today. If you believe one of the other messiahs, what Jesus said is pure heresy. You might find it interesting that members of Jesus’ own family thought he was a madman. His own family! He was either what He said He was, or a madman. The others may not be incompatible with Him, but He is certainly incompatible with them.

But there’s more to Jesus’ message than just that. The alternatives are works-based. Jesus said just one thing: believe. Everything else is a byproduct of taking Jesus for what He said He was and is. Don’t sweat the other stuff. It just happens, and it’s better that way than if we’d done it on our own. And Jesus said one other thing. He promised assurance. With Him, you know exactly where you’re going.

Christianity really is very simple. You can boil it down to a really simple question. Well, two, I guess. God asks, “Why should I have anything to do with you?” Then after you die, God asks, “Why should I let you in here?” The answer to both questions is the same thing. I can put it articulately, but really a one-word answer will suffice. And it has absolutely nothing to do with me.

So if I’m gonna hedge my bets, that’s where I’m gonna hedge them. I was afraid at first what I’d have to give up, but the truth was I didn’t have to give up anything. Given a little time, I just wanted to give those things up.

I realized just after college that I wouldn’t be able to buy happiness, and that the capitalism I spent four years writing about wouldn’t accomplish much. I went looking for something else. I went looking for what every unmarried 22-year-old male looks for. I thought I’d found the key to happiness when I found her. Along the way I picked Christianity back up too. When I hadn’t proven sufficiently the sincerity of my faith, she took a hike. I was crushed, but I still had something. If you subscribe to the belief that it takes 9 positives to counteract a negative, my ratio’s a bit lower than that. The difference is I always have the ace in my hand. So the ratio of disappointments to triumphs really is irrelevant, because I’ve got the triumph that trumps all disappointments.

So I guess what I’m trying to say in a roundabout way is I agree with Frank. Tell materialism to take a hike, go make the world a better place.

Just don’t try to do it on your own, and don’t rely solely on human help.

Mailbag:

Misc things; The trade; Depression

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